The Pulse on the Economy and Capital Markets: October 2 – 6, 2023

To Summarize: Weaker stock and bond markets can be tied to expectations that the Federal Reserve will keep rates higher and for longer than many hoped. The economy continues to demonstrate mixed signals while consumers remain relatively healthy as we near the holiday season. We unpack this and more in the October edition of The Pulse.

In the Markets: The weakness of the stock and bond markets continued through September, which has investors concerned that the Federal Reserve will keep interest rates higher for longer. Despite sectors that are more sensitive to higher interest rates performing poorly, the energy and healthcare sectors outperformed. 

Economic Picture is Blurry: The economy is giving off mixed signals. The manufacturing sector is still contracting; however, it appears we may have reached the bottom of the sector’s weakness. While the services sector continues to expand, it’s not truly accelerating as it once was.

The Resilient Consumer: We continue to keep a close eye on consumers, and overall, they remain healthy and are driving the economy. However, some consumer segments are showing signs of stress as higher credit card borrowing and rates have resulted in increased delinquencies. Big retailers, such as Amazon and Walmart, reported a strong back-to-school season and are optimistic about holiday season spending.

Top Headlines: We’re reading about McDonald’s raising franchisee fees for the first time in 30 years, Cisco makes largest ever acquisition buying a cybersecurity company, Class A rent performance weighs down the apartment markets and fall travel and hotel demand spike in major cities.

Related resources:

• McDonald’s raises fees for franchisees in first price hike in 30 years
• Cisco makes largest ever acquisition, buying cybersecurity company Splunk for $28 billion in cash
• Class A rent performance weighing down some apartment markets
• Weekly hotel performance data shows clearest picture yet for fall travel